Stocks fell nearly 2% after the tariff announcement, and that’s the reaction that rational readers should go with. But if anyone is foolish enough to trust my judgment, here’s a more optimistic take.

I suspect that Trump has decided that he wants to do a China deal before getting into the election year. He knows that his negotiating position will be weaker in 2020, as the Chinese would have an incentive to string things out until after the election. They know that Trump doesn’t want to risk an economic shock right before the election. In addition, Trump wants to run for re-election with a big “win” against China under his belt.

So my prediction is that these tariffs are a sign that Trump plans to do a deal with China in the next month or two. In that sense, it might almost be regarded as “good news” (contra Wall Street).

Trump presumably hopes that China will bow to his demands, but he must also know that a 10% tariff is not large enough to force them to capitulate. The yuan has fallen sharply as a result of the earlier round of tariffs; so Chinese goods will remain quite competitively priced.

So why do I expect a deal in the near future? I’d point to the recent dust-up with Mexico over immigration. Trump’s officials had negotiated with Mexico for a period of months. In those negotiations, Mexico had offered several concessions. Then Trump suddenly and dramatically announced plans to put tariffs on Mexico if they did not agree to his demands. The tariffs never took effect—it was all for show. They then signed a deal that was essentially identical to what had been negotiated before the tariff threat.

The Mexican tariff threat was all theatre, Trump’s way of convincing his fans that his tough negotiating style works. And he succeeded; at least based on conversations I had with several Trump supporters, who thought the tariff threat triggered the Mexican “capitulation”.

So there is a precedent for Trump doing exactly what I am suggesting here—a dramatic threat of tariffs right before an anticipated deal was signed. Then it looks to all the world like a Trump “win.”

How does Trump know he can get a deal? Recall that the previous negotiations foundered on US accusations that China had reneged on previous promises. That’s kind of silly, as in trade negotiations nothing is agreed to until everything is agreed to. As the US made more and more demands, China may have backed off on some positions in order to get a sense of what issues were most important to American negotiators. In any case, Trump presumably knows that China will agree to a deal based on their best previous offer, which was reported to be more than 90% of a completed deal. Thus Trump knows he can get a deal anytime he wants if he’s willing to settle for a deal that incorporates China’s best offer in previous negotiations. Maybe he can even get a bit more.

Substantively, none of this matters, as China will likely not adhere to any deal. Why should they? We don’t adhere to the trade deals that we sign.

People talk a lot about US interests regarding trade deficits, intellectual property, national security, etc. Trump doesn’t care about any of this. Well, he cares a bit about trade deficits. But for the most part, Trump cares about Trump. He’ll gladly give in on Huawei if he can get a trade deal that helps him get re-elected. Do you think Pennsylvania steelworkers care about Huawei? To his credit, Trump correctly understands that the John Bolton’s of the world are foolish warmongers, and Huawei is not a threat to US national security. I suspect that Marco Rubio will be more disappointed by the deal than I will be.

I believe that all of Trump’s negotiations need to be seen through the lens of political theatre. Trump reversed course on both Iran and North Korea, merely because he wanted to do the opposite of what Obama did. Both moves failed, but he paid no political price. If he had succeeded, he would have gotten lots of credit. Trump knows that presidential “activity” is a “heads I win, tails it’s a draw” situation. For example, historians view Wilson as a much better president than Coolidge, even though Coolidge was far superior on the economy, foreign policy, human rights, civil rights, indeed just about everything. Historians like Wilson because he was more active than Coolidge. Bush even got re-elected after the Iraq War fiasco. Presidents are encouraged to roll the dice. Trump knows that.

But again, go with the stock and bond market view—the wisdom of crowds. What do I know?